FedEx Stock to Acquire TNT Express N.V. in $4.8B Deal

Shares of FedEx Corp. (FDX) were trading up +7.33 or +4.40 percent to $174.00 per share in Tuesday's premarket after the company announced in a joint release that it had agreed to acquire TNT Express N.V. for EUR4.4B or $4.8B. FedEx Corp stock closed at $166.67 per share, up +0.45 or +0.27 percent in Monday's regular trading session.

Founded in Little Rock, Arkansas in 1971 as Federal Express Corporation, Memphis, Tennessee based FedEx Corporation is a worldwide delivery and courier service company and the world's largest cargo airline.

The company specializes in express mail, post delivery, freight forwarding and third party logistics, as well as e-commerce and business services. FedEx Corp stock is a component of the S&P 500 and the Dow Jones Transportation Index. The company has annual revenues of approximately $47 billion and is one of the world's most respected employers, employing 325,000 people around the world.

Hoofddorp, The Netherlands based TNT Express N.V. is one of the largest express delivery companies in the world, making as many as one million consigned deliveries daily. The company delivers everything from documents to palletized freight and operates ground and air transportation networks in Africa, the Asia Pacific region, Europe and the Middle East. The company had revenues of 6.7 billion or $7 billion last year.

The agreement will have FedEx Corp. pay 8.00 cash or approximately $8.50 per ordinary TNT Express common share, which represents a 33 percent premium over TNT stock's closing price on April 2nd and a premium of 42 percent of TNT stock's average price of 5.63 over the last three months.

In 2013, United Parcel Service (UPS) tried to take over TNT, but was blocked by European regulators that claimed that the deal would limit some customer's choices for next day delivery to only UPS and DHL. UPS decided to back off after the company failed to find a buyer for parts of TNT required to ensure competition for delivery services.

Both FedEx and TNT stated that they were, "confident that antitrust concerns, if any, can be addressed adequately in a timely fashion, with the deal scheduled to close by the first half of 2016. TNT plans to forgo its airline operations to satisfy regulators and has started making inquiries to find a suitable buyer.

In the two companies' joint press release, Frederick W. Smith, Chairman and Chief Executive Officer of FedEx Corp., said that, "We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe. This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends - especially the continuing growth of global e-commerce - and positions FedEx for greater long-term profitable growth.

Chief Executive of TNT Express, Tex Gunning added that, "This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy. But while we did not solicit an acquisition, we truly believe that FedEx's proposal, both from a financial and a non-financial view is good news for all stakeholders. Our people and customers can profit from the true global reach and expanded propositions, while with this offer our shareholders can already reap benefits today that otherwise would only have been available in the longer run.

The deal will give FedEx Corp. a strong position in the European and other markets where TNT has operations. FedEx stockholders are already benefitting from the deal, with the stock up significantly in this morning's premarket.

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Published on Apr 7, 2015

By Jay Hawk

Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.